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This month, Knight Kiplinger writes about what the Wall Street Journal is calling "the lost decade." This refers to the fact that Standard & Poor's 500-stock index has returned only 1% annualized since the start of this century and less than that since the market topped in the spring of 2000. Knight makes several important points, including that people who added money regularly have been handsomely rewarded for those new investments since the market bottomed in 2002 (see Patience Pays Off).
All this caused me to wonder which diversified U.S. stock funds served their investors best over that bust-and-boom cycle, from April 2000 to the present.
Of the ones still accepting new accounts, those that made money during the second-worst market downturn since the Great Depression and beat the S&P's 79% return since the index's bottom in October 2002 are worth a second look. I narrowed the list to 25, weeding out funds with minimum investments exceeding $25,000. Here, I highlight a few of them (click here to see the complete list).
Eight-year winners
By far the best record is that of CGM Focus (symbol CGMFX), with a total return of 901% since April 2000. It almost doubled investors' money during the 2000-02 bear market, when the S&P 500 fell 44%. But manager Ken Heebner's style of investing could give you vertigo.
Number four on the list, Fairholme (FAIRX), boasts an eight-year return of 246%. It merely tripled investors' money while the S&P stood still. Like CGM Focus, it belongs to our elite Kiplinger 25 list of best funds. So does FBR Focus (FBRVX), which returned 191%.
Right behind Fairholme come a trio of eclectic funds. FMC Strategic Value is so purposefully obscure (it's run by First Manhattan Corp. and doesn't entertain questions from the likes of me) that it doesn't even have a Nasdaq symbol. But its record is sterling. Keeley Small Cap Value A (KSCVX) specializes in three small niches -- orphan companies spun off by their mothers, savings banks converting from mutual to public ownership and companies emerging from bankruptcy -- and handles each of those areas well. The worst thing about it is the 4.5% sales fee.
A pair of fund managers make the honor roll twice. Don Yacktman and his son Steve co-manage Yacktman (YACKX) and Yacktman Focused (YAFFX) funds, with eight-year returns of 182% and 184%, respectively.
Back in 1999-2000, Don Yacktman bore the brunt of almost cruel treatment from Morningstar analysts -- one who said Yacktman fund was "verging on the down-and-out," and another who remarked that "even Job might be eyeing the exits." Yacktman's sin was not making money during 1998 and 1999, the last two years of the Internet-stock bubble, when his style of value investing was out of favor. But the same could be said of seven other funds on this list. Today, Morningstar sings Yacktman's praises.
Where are the Goliaths?
One striking thing about this list is that, except for Janus Mid Cap Value (JMCVX), the giant fund companies are missing in action. There's nothing here from American, Fidelity, T. Rowe Price, Vanguard or their like. I can only conclude that some of the best investments come from shops that seldom advertise and are sometimes downright hard to find. One of the pleasures we have here at Kiplinger's Personal Finance is putting names like these in front of you.
NEXT: See the complete list of 25 winning funds in the new century.
POSTED BY: Rick (June 30, 2008 09:06 AM)
And how is this helpful to anyone? Wow, you are able to pick a few funds out of the thousands out there that had recent good returns... Now if only I had a time machine this article would be helpful.. Unfortunately, the recent high returns only make it less likely that these funds returns will be above average going forward...
POSTED BY: Phil (July 01, 2008 10:18 AM)
(Fred Frailey writes above): "One striking thing about this list is that, except for Janus Mid Cap Value (JMCVX), the giant fund companies are missing in action. There's nothing here from American, Fidelity, T. Rowe Price, Vanguard or their like."
Fidelity Low-Priced Stock Fund (FLPSX) made the (full) list.
POSTED BY: Limoman (July 10, 2008 11:37 AM)
All nice and dandy, but Your Top 25 funds for the 21st century should include yrs from 2000 thru 07' and not just late 02'..Leaving out how they performed In Bear and not just Bull Yrs is More Important, me thinks...
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